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Bureau of Mines Information Circular/1985 



Mining Deep Ocean Manganese Nodules 

Description and Economic Analysis of a Potential Venture 



By C. Thomas Hillman and Burton B. Gosling 




UNITED STATES DEPARTMENT OF THE INTERIOR 



T5| 

A*/NES 75TH A**^ 



■Jt*t£ ZtzJCti. ^CxrcatA €>£ Hv.'u^ 



Information Circular 9015 

)l 

Mining Deep Ocean Manganese Nodules 

Description and Economic Analysis of a Potential Venture 
By C. Thomas Hillman and Burton B. Gosling 




UNITED STATES DEPARTMENT OF THE INTERIOR 

Donald Paul Hodel, Secretary 

BUREAU OF MINES 
Robert C. Horton, Director 




Library of Congress Cataloging in Publication Data: 



THaisT 




-TWfyfc 



Hillman, C 4 Thomas 

Mining deep ocean manganese nodules: description and economic 
analysis of a potential venture. 

(Bureau of Mines information circular ; 9015) 

Bibliography: p. 15-16. 

Supt. of Docs, no.: I 28.27:9015. 

1. Manganese nodules. 2. Manganese mines and mining, Submarine. 
I. Gosling, Burton B. II. Title. III. Series: Information circular (United 
States. Bureau of Mines) ; 9015. 



[TN490.M3] 622s 338.2'74 84-600337 






CONTENTS 



- 



Page 



Abstract 1 

Introduction 2 

Resources 3 

Location and geography 3 

Geologic setting 5 

Deposit description 5 

Tonnage and grade estimates 6 

Integrated recovery system and costs 7 

System description 7 

System costs 8 

Economic analysis 9 

Discussion 9 

Base case description 10 

Methodology and results 11 

Summary and conclusions 14 

References 15 

Appendix. — Capital and operating cost detail for study area CI 17 

ILLUSTRATIONS 

1. Location of the northeast Pacific high-grade zone and DOMES Sites A, B, 

and C 3 

2. Location of study area CI and sediment distribution in the northeast 

Pacific high-grade zone 4 

3. Base case project development schedule 10 

TABLES 

1. Mean metal content, study area CI 6 

2. Resource estimates and supporting data, study area CI 7 

3. Transportation data summary, study area CI 8 

4. Capital cost summary 9 

5. Operating cost summary 9 

6. Commodity data summary 11 

7. Metal recovery options and resultant rates of return 12 

8. Effects of grade variations on rates of return 12 

9. Price options and resultant rates of return 13 

10. Effects of capital and operating cost variations on rates of return 13 

11. Effects of shortened development schedule on rates of return 13 

12. Rates of return effected by favorable options 14 

A-l. Mine costs 17 

A-2. Transportation costs 18 

A-3. Process costs 19 



^ 





UNIT OF MEASURE ABBREVIATIONS USED IN THIS REPORT 


cm 


centimeter 


m 


meter 


cm/s 


centimeter per second 


m 2 


square meter 


°C 


degree Celsius 


mm 


millimeter 


dwt 


deadweight long ton 


m/s 


meter per second 


d/yr 


day per year 


nmi 


nautical mile 


g/cm 3 


gram per cubic centimeter 


pet 


percent 


ha 


hectare 


t 


metric ton 


h/d 


hour per day 


t/km 2 


metric ton per square kilometer 


kg/m 2 


kilogram per square meter 


t/yr 


metric ton per year 


km 


kilometer 


wt pet 


weight percent 


km 2 


square kilometer 


yr 


year 


Lt 


long ton 







MINING DEEP OCEAN MANGANESE NODULES 
Description and Economic Analysis of a Potential Venture 
By C. Thomas Hillman and Burton B. Gosling 



ABSTRACT 

This Bureau of Mines report describes an investigation of factors in- 
fluencing economic viability of a proposed system to mine and process 
manganese nodules. The system consists of hydraulic dredging and ammo- 
nia leach processing designed to recover three metals: nickel, copper, 
and cobalt. A ferromanganese recovery plant is a considered option. 
Annual capacity is 3 million dry metric tons (t) nodules. 

Aftertax rates of return (ROR's) of only 7.38 and 6.63 pet are pre- 
dicted for three- and four-metal base scenarios, respectively. Sensi- 
tivity analyses indicate that variations in commodity prices, metal 
recoveries, and deposit grades produce similar incremental changes in 
ROR. Estimated cumulative effects of price variations are greatest. 
While three-metal operations generally yield higher predicted returns, 
potential increases in manganese price and process recovery could make 
four-metal operations most profitable. 

Maximum variations in both capital costs and three-metal operating 
costs result in ROR changes of about 25 pet. In contrast, four-metal 
ROR's exhibit variations to 70 pet. Even so only a best case analysis, 
utilizing favorable variations in all categories tested, generated ROR's 
approaching a level thought necessary to trigger company interest. Con- 
sequently, it is concluded that nodule mining will not take place in the 
foreseeable future without significant financial incentives. 

Supervisory physical scientist, Western Field Operations Center, Bureau of Mines, 
Spokane, WA. 



INTRODUCTION 



Deep ocean manganese nodules represent 
an exceptionally large and potentially 
important mineral resource. Deposits of 
the highest grade and abundance occur in 
the northeast equatorial Pacific Ocean in 
an area of about 10 million km 2 . This 
area is of primary commercial interest 
and is known as the high-grade zone. 

Manganese nodules are also called poly- 
metallic nodules because they consist 
primarily of manganese and iron oxides 
that contain elevated concentrations of 
nickel, copper, and cobalt. Signifi- 
cantly, the United States is heavily de- 
pendent on foreign sources for all 
nickel, cobalt, and manganese. There- 
fore, it is in the Nation's best interest 
that these ocean resources be evaluated 
and integrated systems to mine and pro- 
cess them be proposed. 

In response to this need, the Bureau is 
involved in a continuing Minerals Avail- 
ability Program (MAP) effort to collect 
and analyze information on mineral re- 
sources and mining and processing sys- 
tems. Data have been gathered during the 
past 7 yr through grants to Scripps In- 
stitution of Oceanography and Washington 
State University and by contacts with the 
U.S. Geological Survey, the National 
Oceanic and Atmospheric Administration 
(NOAA), and private consultants. Much 
raw data came from project DOMES (Deep 
Ocean Mining Environmental Study) spon- 
sored by NOAA. DOMES involved a detailed 
investigation of the marine environment 
at three potential minesites (designated 
Sites A, B, and C) in the high-grade zone 
and a determination of possible environ- 
mental effects of manganese nodule min- 
ing. Figure 1 shows the high-grade zone 
and the three DOMES sites. 



nodule resources in the vicinity of the 
three DOMES areas and describes a pro- 
posed integrated system to mine, trans- 
port, and process nodules from one poten- 
tial minesite in each of the three areas. 
Cost estimates were made and discounted- 
cash-flow analyses were performed to 
evaluate potential profitability. Re- 
sults indicated an ROR of 6 pet or less 
after taxes, a figure that is only a 
small fraction of the estimated 25 to 30 
pet ROR needed to attract risk capital. 
Because of these low predicted returns, 
the present study attempts to identify 
those factors having the most significant 
effects on the economics of proposed re- 
covery systems discussed in reference 1. 
The goal is to provide information to 
both government and industry with inform- 
ation that will be used to more accurate- 
ly plan for the eventual mining and util- 
ization of manganese nodules. 

This report first describes resources 
of a potential minesite (Subarea CI in 
reference 1), one of several previously 
evaluated. The area encompasses DOMES 
Site C and for this report is designated 
study area CI. All costing and subse- 
quent analyses are based on resource es- 
timates for this area. Because of high 
grade and abundance, nodule resources 
there are believed representative of de- 
posits that will be mined and processed 
before any others; the term frequently 
used for such a deposit is "first- 
generation minesite." Following resource 
definition, an integrated recovery system 
is described, and costs for the system 
are estimated and summarized. A cost 
sensitivity analysis using multiple runs 
of the Bureau's MINISIM08 computer pro- 
gram (2) is subsequently described along 
with results and conclusions. 



Several Bureau reports have resulted 
from the MAP effort. The latest report 
( 1) , 2 contains estimates of manganese 

^Underlined numbers in parentheses re- 
fer to items in the list of references 
preceding the appendix. 



In context of publicly available infor- 
mation, it is believed that this analy- 
sis, based on resource estimates for ac- 
tual deposits, should improve upon other 
financial analyses based on hypothetical 
resources. It is also reasonable to ex- 
pect mining consortia to delineate and 



• 



ASIA 








\ SOUTH 

AMERICA 




FIGURE 1. - Location of the northeast Pacific high-grade zone and DOMES Sites A, B, and C. 

mine those areas within potential mine- thus potentially exeeding economic pre- 
sites of highest grade and abundance, dictions in this study. 

RESOURCES 



LOCATION AND GEOGRAPHY 

Study area CI is in the north-central 
portion of the Pacific high-grade zone, 
approximately 2,200 km southest of Los 
Angeles, CA (fig. 2). The area is ap- 
proximately 57,600 km 2 and lies between 
latitudes 14.0° to 16.2° N and longitudes 
124.8° to 127.0° W, at an average water 
depth of approximately 4,600 m. 

Climate is moderate throughout the 
year; rainfall is slight and air temper- 
atures average about 25° C for the entire 
year. Tropical storms and typhoons occur 
primarily during the summer months and 
usually last a day or two. An average of 
15 storms per year occurred during the 
1966-75 period, and an average of 11 of 



those occurred in the 
through September. 



months of July 



Measurements made in 1975-76 by NOAA 
indicate surface currents are moderate, 
averaging about 17 cm/s O ) . These cur- 
rents flow in a west-southwest direction, 
and are controlled by moderate trade 
winds that blow steadily throughout the 
year. Surface currents gradually de-- 
crease to zero at a depth of 160 m; at 
that approximate depth currents reverse 
direction and flow eastward at low velo- 
city. Although bottom current data for 
study area CI are unavailable, theoret- 
ical studies and water mass characteris- 
tics indicate a net eastward flow at low 
velocities (3). 




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Based on known data, it is assumed that 
neither surface nor bottom currents would 
significantly hinder mining in study area 
CI. Tropical storms can be expected to 
preclude mining for 30 to 40 days annual- 
ly, mostly during the summer months. 

GEOLOGIC SETTING 

Essentially all of the high-grade zone, 
including study area CI, occurs within 
the Eastern Pacific Sedimentary Basin, 
which extends from about 5° to 20° N lat- 
itude and eastward from 170° W longitude 
and is bounded both east and west by sea- 
mount provinces. Sediment-covered hills 
dominate the ocean floor topography and 
are characteristically elongated and par- 
allel (4_) , they trend north-south or 
northeast-southwest, and have slopes typ- 
ically between 2° and 3° ( 5_) . Local re- 
lief is generally low, except in areas of 
current scour or fault scarps. Parallel 
scarps impart a stairstep effect on hill- 
sides, and where accompanied by sediment 
slumping, underlying basalt bedrock is 
exposed. 

Water depths decrease toward the East 
Pacific Rise (fig. 2) , where oceanic 
crust is being formed within a narrow 
zone called a rift or spreading center. 
Progressive outward movement of newly 
formed crust results in successively old- 
er rocks in a westerly direction ( 6_) . 
Bedrock age in the area is mostly Oligo- 
cene, while further west crust is as old 
as Late Cretaceous. 

Ocean floor in the area is covered by a 
reddish-brown to chocolate-colored pelag- 
ic clay unit. This unit contains as much 
as 65 pet illite, kaolinite, and smec- 
tite; the remainder consists mostly of 
siliceous organic material, primarily ra- 
diolaria, diatoms, silicof lagellate skel- 
etal remains, and sponge spicules. Lo- 
cally, calcareous material comprises as 
much as 5 pet of the sediment, but for 
the most part is dissolved before it 
reaches the seafloor. Elsewhere in the 
high-grade zone, pelagic clay grades into 
siliceous ooze and clay that contains 
variable yet high percentages of si- 
liceous organic material. Calcareous 



sediments occur in the southeast and 
southwest parts of the zone (fig. 2). In 
study area CI, average bulk density of 
sediments is estimated to be about 1.3 
g/cm 3 (_3 ) • Estimated sediment thickness 
is 100 m, and present day sedimentation 
rates probably range from 1 to 3 mm/1, 000 
yr ( 6_) . Rates may have been greater in 
the past to account for the 100-m accumu- 
lation during the past 30 million yr 
(middle Oligocene). 

DEPOSIT DESCRIPTION 

Manganese nodule deposits occur as ir- 
regular, single-layer fields at the 
sediment-water interface. Typically, few 
nodules occur below a sediment depth of 1 
m, and those within a meter of the ocean 
floor comprise an amount equal to about 
25 pet of those at the sediment surface 
( 6_) . Populations, defined as percentage 
of seafloor covered by nodules, range 
from zero to nearly 100 pet. 

Individual nodules have a dull luster 
and are earthy brown to bluish black col- 
or. Shapes of smaller nodules are mostly 
spheroidal, with progressively larger 
ones becoming ellipsoidal and then dis- 
coidal. This phenomenon is attributed to 
unequal growth rates; bottom portions, 
nested in sediment, are thought to ac- 
crete more rapidly than exposed tops (7^). 
Irregular shapes are common and result 
from either natural agglomeration of 
small nodules or the tendency of nodules 
to reflect morphology of irregularly 
shaped nuclei. 

Surface textures range from smooth to 
very rough and may be attributed to dif- 
ferential growth patterns of constituent 
oxide phases. Porosity and internal sur- 
face area are both high, typically 50 pet 
and 200 to 300 m 2 , respectively ( 8) . 
Consequently, individual nodules contain 
about 30 wt pet moisture. Wet specific 
gravity is generally between 2.0 and 2.5. 

Internally, nodules are composed of one 
or more nuclei surrounded by discontin- 
uous, concentric layers of manganese and 
iron oxides. Nuclei may be shark teeth, 
whale ear bones, small pieces of other 



nodules, or small rock fragments. Clay 
layers, generally present at Irregular 
intervals between oxide layers, are 
thought to indicate long periods of non- 
growth. Concentric and radial fractures 
are nearly universal in larger nodules. 

Nickel and copper probably occur within 
the manganese oxide minerals todorokite 
and birnessite by means of adsorption, 
lattice substitution, or ion exhange (8^). 
The occurrence of cobalt is less well 
known, but relatively recent work (9) in- 
dicates that cobalt in low-grade nodules 
is contained principally in iron oxide 
phases. In high-grade nodules, manganese 
phases are preferentially enriched in 
cobalt. 

TONNAGE AND GRADE ESTIMATES 

Quantity and grade estimates are based 
on information in reference 1. Evalu- 
ation of chemical analyses of samples 
from study area CI (10) show that the 
arithmetic mean of metal concentrations 
can be predicted within ±10 pet at a con- 
fidence level of 90 pet. Work by other 
investigators (11) using many hundreds of 
samples likewise indicates that grades 
within large areas of the high-grade zone 
can be predicted with similar accuracy. 

Nodule abundances (weight per unit area 
of seafloor) and nodule tonnages calcula- 
ted from those abundances are more diffi- 
cult to determine. Even though deposits 
cover very large areas, local nodule pop- 
ulations are extremely variable. Over 
distances of a few meters, abundances 
typically range from near zero to 10 to 
15 kg/m 2 . Ideally, sampling should be 
conducted on a grid with coverage by tel- 
evision and seafloor photography between 
points. Because the purpose of most in- 
vestigations to date has been research 
rather than resource evaluation, sampling 
locations are generally random and photo- 
graphic coverage is along linear tracks. 
However, tonnage estimates are believed 
to be conservative, because photographic 
correction factors (12) that generally 
raise abundance-tonnage estimates could 
not be applied. These factors, used by 



mining consortia, require 
not publicly available. 



detailed data 



Boundaries of the area are primarily 
based on locations of available sample 
data. A rectangular shape is used for 
convenience and does not necessarily de- 
limit or enclose any single deposit. In 
reality, study area CI may include all or 
parts of several deposits separated by 
barren seafloor. 

Table 1 contains mean metal concentra- 
tions (grade) calculated from assays of 
available samples taken at 64 sample 
sites in the study area. Combined con- 
centrations of nickel plus copper (2.37 
slightly greater than the 
regarded by some (13) to be 
requirement for a viable 



wt pet) is 
2.3 wt pet 
the mininum 
minesite. 



TABLE 1. - Mean metal content, study 
area CI 

wt pet 

Cobalt 0.26 

Copper 1.04 

Iron 6.90 

Manganese 26.80 

Molybdenum .07 

Nickel 1.33 

Average abundance was calculated from 
estimates for individual ship stations. 
Estimates determined by sampling are not 
differentiated from those determined from 
photographs, nor is any greater signifi- 
cance attached to them. Assuming 30 pet 
water content, the calculated average of 
11.7 wet kg/m 2 converts to 8.2 dry kg/m 2 
or 8,200 dry t/km 2 . 

Gross dry tonnage can be easily figured 
by multiplying area size in square kilom- 
eters by the average dry abundance; in 
the case of study area CI, 57,600 km 2 
times 8,200 dry t/km 2 . However, the re- 
sult can be misleading, because several 
practical considerations significantly 
lessen the amount of resource that can 
actually be recovered. Localized topo- 
graphic features such as fault scarps and 
steep slopes reduce the minable area 



to an estimated 75 pet of the minesite 
(14). Possibly one-third of the remain- 
ing area contains deposits with combina- 
tions of grade and abundance insufficient 
to warrant mining. As a result, it is 
reasonable to assume about half of the 
original site can be mined. Addition- 
ally, retrieval efficiencies of presently 
envisioned mine systems are expected to 
be about 90 pet. Also, ship maneuvering 
limitations indicate that only about 70 
pet of the minable area will be travers- 
ed, resulting in a net mining efficiency 
of slightly more than 60 pet. Therefore, 
recoverable resources from first- 
generation mining may be only about 30 
pet of the in situ tonnage. 

Minable and recoverable resources are 
listed in table 2, as well as average 
nodule abundance, mine size, and other 
pertinent data. Proposed mining- 



transportation-benef iciation systems , 
costs, and economic analysis in succeed- 
ing sections are based on this informa- 
tion, and on the mean metal content in 
table 1. 

TABLE 2. - Resource estimates and 
supporting data, study area CI 

Total area km 2 .. 57,600 

Minable area 1 km 2 .. 28,800 

Average abundance dry t/km 2 . . 8,200 

Minable resource 10 6 dry t.. 236.2 

Minable nodules traversed. .. .pet. . 70 

Pickup efficiency pet.. 90 

Mining efficiency 2 pet.. 63 

Recoverable resource 3 .. 10 6 dry t.. 148.8 

1 50 pet of total area. 

2 Percent of nodules traversed times 
pickup efficiency. 

3 Minable resource times mining 
efficiency. 



INTEGRATED RECOVERY SYSTEM AND COSTS 



SYSTEM DESCRIPTION 

The system proposed to recover nodules 
from study area CI is hypothetical be- 
cause there is presently little commer- 
cial experience from which to draw. How- 
ever, the system and costs are based on 
information from many knowledgeable 
sources, published and unpublished. Hy- 
draulic mining and ammonia leach (Cu- 
prion) processing are proposed because 
hydraulic mining systems have been tested 
somewhat successfully by both Interna- 
tional Nickel Co. (INCO) and Deepsea Ven- 
tures, and Kennecott has apparently dem- 
onstrated in a pilot plant the feasibil- 
ity of the ammonia leach process. Slurry 
transfer is the most probable method of 
transportation of nodule ore because the 
material is amenable, and considerable 
slurry handling experience exists in the 
minerals industry. For detail beyond 
what is given in the following discus- 
sion, the reader is referred to reference 
1. 

Prior to mining, the explored minesite 
would be characterized in detail. 
Large-scale maps would be drawn showing 



locations of all bottom obstructions and 
specific mining blocks with detailed 
grade and abundance information. Mining 
plans would be drawn up at least a year 
in advance and would consider not only 
economics, but also licensing require- 
ments and other regulatory and environ- 
mental factors. 

Mining is scheduled 20 h/d, 300 d/yr, 
with a projected annual production of 3.0 
million dry t. Equipment modification 
and repair, drydocking, and other nonmin- 
ing activity would take place during Au- 
gust and parts of July and September, 
when most major storms occur. Two ships, 
each towing hydraulic collectors at a 
velocity of 1.0 m/s , would conduct opera- 
tions independently of one another. Nod- 
ules would be dislodged, screened, and 
channeled to a large-diameter pipe con- 
nected to the ship. Submerged hydraulic 
pumps would maintain upward flow of a 
slurry composed of water, nodules, and 
nodule fragments. 

Aboard the ship, nodules would be 
screened, conveyed to storage, and 
dewatered by decantation. To prevent 



formation of a surface plume, decanted 
sediment and biogenic debris would be 
discharged through a pipe extending to a 
depth of about 200 m (15). No attempt to 
upgrade the ore is presently envisioned 
because it is not amenable to conven- 
tional flotation or other cost-effective 
means; the metals of interest are inti- 
mately associated with the oxide matrix. 

Every few days nodules would be reslur- 
ried and pumped through a flexible pipe 
to 70,000-dwt-capacity nodule transports 
where they would be dewatered and trans- 
ported to a terminal on the west coast of 
the United States. At the terminal, 
portable units would reslurry and pump 
the ore to holding ponds on shore. From 
there the nodule slurry would be pumped 
an assumed distance of 40 km inland to 
the processing plant. Table 3 is a sum- 
mary of pertinent transportation data. 
Three transport vessels, each making 23 
trips annually, would be required to sup- 
port a 3.0-million-t-capacity plant. 

TABLE 3. - Transportation data summary, 
study area CI 

Transport capacity, t: 

Wet ore 1 64,000 

Dry ore 44 , 800 

Distance to port nmi.. 1,840 

Cycle time days.. 13 

Annual trips per vessel 23 

Number of vessels require d 3 

"90 pet of the nominal capacity of 
70,000 Lt. 

Operations at the Cuprion plant would 
be conducted 24 h/d, 330 d/yr, at full 
capacity. The wet ore would be reclaimed 
from storage, and ground in a mixture of 
seawater and recycled process liquor con- 
taining dissolved copper and ammonium 
carbonate. Cuprous ions, generated by 
introduction of carbon monoxide in a 
series of reaction vessels, catalyze the 
reduction of manganese from the tetrava- 
lent to the divalent state, thereby re- 
leasing metals bound in the oxide matrix. 
The metals are separated from the solid 
residue by countercurrent washing, and 
the residue is processed with steam to 
recover ammonia and carbon dioxide. 



Nickel and copper would be extracted from 
solution by liquid ion exchange followed 
by electrowinning on high-purity cath- 
odes. Cobalt would be chemically precip- 
itated, purified, and recovered as metal- 
lic or oxide powder. 

A facility to recover manganese in the 
form of ferromanganese is a considered 
option. Carbonate residue from the ammo- 
nia recovery section of the Cuprion plant 
would be washed and centrifuged (16). 
Prior to flotation with saponified fatty 
acids, thickened residue would be mixed 
with fresh water, soda ash, caustic soda, 
and sodium silicate. Manganese carbonate 
would be recovered in the froth as a con- 
centrate assaying up to 40 pet manganese. 
The concentrate would be thickened to 50 
pet solids , and then dried and calcined 
in a rotary kiln to make synthetic manga- 
nese oxide. This material would be 
stored or conveyed directly to submerged 
resistance furnaces charged with lime- 
stone, silica flux, coke, and iron ore. 
Slag would be skimmed off for disposal, 
and molten ferromanganese (78 pet Mn) 
poured into molds for cooling and ship- 
ment. The ferromanganese plant would 
operate 330 d/yr, and process an esti- 
mated 3 million t of Cuprion residue 
annually. 

Tailings from both Cuprion and ferro- 
manganese plants would be combined with 
other plant wastes and pumped as far as 
100 km to a disposal site. At the dis- 
posal site, the tailings would be pumped 
into conventional waste impoundments. 
Granulated slag hauled from the ferroman- 
ganese plant would be a secondary source 
of bank material, if needed. Successive 
ponds would be stabilized in various ways 
in accordance with appropriate environ- 
mental regulations. 

SYSTEM COSTS 

All cost estimates in this study are in 
January 1983 dollars. Most are updated 
from January 1981 costs presented in re- 
ference 1. The time and tonnage basis 
for working capital calculations is 
changed, resulting in slight increases in 
mine and transportation working capital 



and a small decrease in processing capi- 
tal. Also, plant capital has been reduc- 
ed to reflect recent estimates (17) . In- 
dexing data used are from a Bureau cost 
index computer program and price indices 
published by the Bureau of Labor 
Statistics. 

Tables 4 and 5 are summaries of capital 
and operating costs for the proposed in- 
tegrated recovery system. Tables A-l 
through A-3 of the appendix contain addi- 
tional cost detail and descriptions of 
the various cost factors. 

TABLE 4. - Capital cost summary, million 
January 1983 dollars 

Investment 



Mining 

Transportation and transfer. . 
Cuprion plant and facilities. 

Total (3-metal) 

Ferromanganese plant 

Total (4-metal) 



$590, 


.6 


310. 


.6 


726, 


.9 



1,628.1 

215.3 
1,843.4 



TABLE 5. - Operating cost summary, 
January 1983 dollars 





Annual 
10 6 


Per dry 
t ore 




$76.5 

36.7 

110.9 


$25.50 
12.23 


Transporation and 


Cuprion plant and 


36.97 




tl) 

1) 




Total (3-meta 
Ferromanganese pla 


224.1 
216.6 


74.70 
72.20 


Total (4-meta 


440.7 


146.90 



Mine capital includes money for 6 yr of 
exploration and detailed site character- 
ization; once mining begins this expense 
is treated as an operating cost. The re- 
search and development budget of nearly 
$158 million is divided about evenly be- 
tween mining and processing. Working 
capital is based on full production for 



15, 12, and 6 months, respectively, for 
mining, transportation, and processing. 
Additional capital of $23.2 million is 
allowed for exceptional expenses associ- 
ated with at-sea testing and modifying of 
the collector. Mine ships, on-board 
equipment, pipelines, and collectors are 
assumed to be new and constructed in the 
United States. 

Transportation investments include pur- 
chase of three new European-built ships 
for slightly more than $200 million. Al- 
so included are costs for construction of 
an offloading facility (slurry terminal) 
on a 10-ha site, 40 km of slurry pipeline 
to the plant, and purchase of a high- 
speed supply boat. 

Processing capital consists of all land 
purchases, equipment, buildings, a 100-km 
slurry line to tailing disposal, an 8-km 
railroad spur line, an 8-km access road, 
and installation of turbines for gener- 
ation of power for Cuprion plant opera- 
tion. Power for a ferromanganese plant 
would be purchased. Not included is 
capital for infrastructure such as 
townsite. 

Operating costs include allowances for 
wages and benefits, material and sup- 
plies, maintenance and repair, fuels and 
utilities, and insurance. Subsistence 
for ship's crew is included in mining 
and transportation, while costs associ- 
ated with operation of a small supply 
boat, unloading facility, and pipeline 
(40 km) to plant are charged to transpor- 
tation. Extraordinary expenses associ- 
ated with processing include maintenance 
of the railroad spur and operation of the 
100-km pipeline to waste disposal. Oper- 
ation of a ferromanganese plant at full 
capacity incurs the largest single opera- 
ting expense, nearly $120 million for 
purchased power. 



ECONOMIC ANALYSIS 



DISCUSSION 



Financial analyses carried out during 
the initial Bureau study of three poten- 
tial minesites (1) resulted in low 



predicted ROR's. Two analyses for each 
site were reported; one for the Cuprion 
process, which recovers nickel, copper, 
and cobalt (three-metal), and one for 
Cuprion plus ferromanganese (four-metal) 



10 



recovered from processing about half of 
the carbonate residue available from 
Cuprion processing. Three-metal ROR's 
ranged from 4.1 to 6.0 pet, while four- 
metal projections ranged from 3.5 to 5.2 
pet. Considering political and technical 
risks, these predictions are far below 
the 25 to 30 pet ROR that might attract 
venture capital. 

This study attempts to identify through 
sensitivity analysis, those factors that 
most affect economic viability of the 
proposed nodule mining venture; factors 
that should be subjected to close scruti- 
ny in future planning and evaluation. 
The sensitivity analysis addresses mining 
and processing of nodules from study area 
CI, an area representative of first- 
generation minesites, those having depos- 
its of relatively high grade and abun- 
dance. The proposed integrated recovery 
system and associated costs serve as the 
basis for two scenarios or base cases: a 
three-metal and a four-metal operation. 
Several cost factors associated with 
these base cases are varied through a 
series of financial analyses using the 
Bureau of Mines MINSIM08 computer program 
(2). The factors are varied independent- 
ly to determine effects on predicted 
ROR. 

BASE CASE DESCRIPTION 

Both the three- and four-metal oper- 
ations utilize descriptions and costs 



presented in preceding sections. The 
three-metal case is essentially the same 
as described in reference 1; costs are 
updated. However, the four-metal case 
involving the add-on f erromanganese plant 
is different. Instead of recovering fer- 
romanganese from only half the Cuprion 
process residue, the entire amount is 
treated to produce substantially more 
metal. Subsequent financial analyses in- 
dicate that the larger production scheme 
would be slightly more profitable. 

Figure 3 depicts the relatively aggres- 
sive project schedule assigned to both 
base cases. Project timing, tax treat- 
ment, and other assumptions are identical 
to one another. Research and development 
would begin as soon as possible in the 
first year and would continue through the 
seventh year. Exploration would also be- 
gin in the first year and continue 
through year 6, then resume in year 10 
and be carried on through year 30. The 
exploration ship would assist in mining 
tests during years 7 through 9. Plant 
construction would last 4 yr (years 6 
through 9) and ship construction about 5 
yr. Keel for the first ship would be 
laid in year 6, with completion of con- 
struction in year 8. At-sea tests would 
be conducted late in year 8 and early 
year 9. A second ship would be con- 
structed in years 8 through 10, and im- 
provements made during testing of the 
first ship would be incorporated. Pro- 
duction would begin in the 10th year; 



1 1 1 1 
Research and 


| i i i 
development 


i | i l 


1 1 | 1 1 1 ! | I 1 1 i | 


i I I l | 












Plant and 


ship construction 




















Startup 


Full production 














Exploration 






Detailed exploration 




i i i i 


1 . , , 


, 1 , , 


i i 1 i i i i 1 i i i i 1 


i i i i 1 



10 



20 



15 
YEARS 

FIGURE 3. - Base case project development schedule. 



25 



30 



11 



full capacity of 3 million dry t annually 
is scheduled to begin in year 12 and con- 
tinue for 20 yr. 

Assumptions that materially affect 
results of the analysis include the 
following: 

1. A go-ahead decision is made early 
enough to allow proper planning for 
construction. 

2. Costs and commodity prices escalate 
at the same rate. 

3. Equity capital is used, thus no fi- 
nance charges are incurred. 

4. A 9-pct State income tax and 4 pet 
property taxes are included as well as 
Federal income tax. 

5. A payment of 0.75 pet excise tax on 
gross value is assumed, which is mandated 
by the Deep Seabed Hard Mineral Resource 
Act. 

6. Depletion is used; 15 pet for cop- 
per and 22 pet for nickel, cobalt, and 
manganese. 

Metal contents (grade), estimated re- 
coveries, and commodity prices for the 
two base cases are listed in table 6. 
Commodity selling prices for nickel, cop- 
per, and f erromanganese represent a 10-yr 
mean (1973-82) calculated in constant 
1983 dollars. The average cobalt price 
was adjusted downward, because mean year- 
ly values for the 1978-81 period are con- 
sidered artificially high. This was done 
by assigning the mean of the two enclos- 
ing years, that is 1977 and 1982, to the 
four high years in the computation. 

METHODOLOGY AND RESULTS 

The primary tool used in the sensitiv- 
ity analysis is the Bureau's mine sim- 
ulation computer program (MINSIM08) de- 
vised by personnel of the Minerals Avail- 
ability Field Office, Denver, CO (2). 
This program, among other things, com- 
putes the ROR for potential investments 
when required operational parameters are 



supplied. This is the profitability 
yardstick used for comparison of the var- 
ious factors tested. Necessary data re- 
quired by the program include capital and 
operating costs, investment scheduling, 
metal processing recoveries, ore grade, 
and various product characteristics. 

TABLE 6. - Commodity data summary, base 
case conditions 



Cobalt. ... 
Copper. . . . 
Manganese 1 
Nickel. . . . 



Metal 


Re 


covery , 


Price 


content, 




pet 


per 


wt pet 






lb 


0.26 




65 


$8.53 


1.04 




92 


1.17 


26.80 




44 


.25 


1.33 




92 


3.62 



Recovered as f erromanganese , contain- 
ing 78 pet manganese; listed price is per 
pound f erromanganese. 

The first step toward sensitivity anal- 
ysis requires identification of param- 
eters to be tested. Those chosen include 
capital costs, operating costs, ore 
grade, process recoveries, metal prices, 
and the length of the preproduction peri- 
od. Additionally, best case runs were 
made to determine results of a combina- 
tion of favorable factors on the two base 
cases. 

Individual parameter ranges were estab- 
lished according to the uncertainty of 
the original estimate. For example, cap- 
ital and operating costs were varied up 
to 25 pet, while ore grade variance was 
limited to ±10 pet. Once a range was as- 
signed, analyses were completed using the 
extreme values of the range to demon- 
strate maximum effects of the parameter 
on ROR. Additional, intermediate runs 
were made for capital and operating cost 
parameters, because of the relatively 
large degree of uncertainty attached to 
costs. 

Base case analyses were run initially, 
and results served as standards for all 
subsequent analyses. Resulting ROR's 
are, in percent, 

• Three-metal (Cuprion)... 7.38 

• Four-metal 6.64 



12 



These values are slightly higher than 
those in reference 1 because of minor 
differences in methodology and the change 
to full production of ferromanganese. 
The four-metal base case is slightly less 
profitable despite significant additional 
revenues, because of a near doubling of 
operating costs. 

Table 7 contains estimated ROR's from a 
series of runs testing variations in met- 
al recoveries. Logically, the greatest 
potential effect on return is exhibited 
by manganese, because there is a much 
greater potential for variance. Cobalt 
has the second greatest potential af- 
fect, resulting from a combination of 
high product value and relatively high 
variances. Incrementally, increased 
nickel recovery raises projected return 
the most; about 1.3 pet for every percent 
increase. Manganese raises the ROR about 
1.0 pet for each percent rise in re- 
covery. For cobalt and copper the incre- 
mental rise in ROR is 0.44 and 0.31 pet, 
respectively. 

TABLE 7. - Metal recovery options and 
resultant rates of return, percent 





Recovery 


ROR 




Low 


Base 


High 


Low 


Base 


High 




60 


65 


70 


7.13 


7.38 


7.63 




90 


92 


94 


7.33 


7.38 


7.43 


Manganese 1 . 


35 


44 


60 


4.93 


6.64 


9.08 




90 


92 


94 


7.16 


7.38 


7.59 



ROR Rate of return. 

'Recovery from Cuprion manganese car- 
bonate tailing. 

Processing feed grade ranges were set 
at only ±10 pet, because considerable 
confidence can be placed in grade esti- 
mates. However, as the nickel, copper, 
and cobalt grades are assumed directly 
proportional to one another, it is also 
appropriate to demonstrate the effect of 
varying all three recovered metals simul- 
taneously. Results of grade variation 
runs are listed in table 8. As might be 
expected, the ROR variation is a direct 
reflection of the relative level of con- 
tribution each metal makes in proportion 
to total revenues for the operation. 



Therefore, nickel has the greatest effect 
followed by cobalt and then copper. 
Although a much larger effect occurs when 
all three metals are varied simultaneous- 
ly, the change in ROR is still not great 
enough to suggest that slight grade 
changes will significantly affect propos- 
ed operations. 

TABLE 8. - Effects of grade variations on 
rates of return, percent 



Cobalt , 

Copper , 

Nickel , 

3-metal variation. 



Low, 




High, 


-10 


Base 


+10 


pet 




pet 


7.00 


7.38 


7.75 


7.14 


7.38 


7.61 


6.38 


7.38 


8.31 


5.67 


7.38 


8.87 



Similar analyses were not conducted for 
the manganese producing options, because 
expected grade variations are insignifi- 
cant when compared to wide limits placed 
on manganese recovery. 

The third parameter investigated was 
commodity price. Range end members were 
taken as the extreme upper and lower 
values for 1973-82 annual prices. In 
order to make direct comparisons, these 
values were escalated to constant 1983 
dollars using price indexes published by 
the Bureau of Labor Statistics. Cobalt 
is the one exception; range was determin- 
ed from the highest and lowest annual 
average excluding years 1978-81, because 
of the previously mentioned artifically 
high selling price during those years. 
Table 9 summarizes the various price op- 
tions and ROR's resulting from MINSIM08 
analysis. 

From this analysis it is seen that 
nickel price variations have the largest 
incremental effect on ROR. For instance 
a 1-pct rise in nickel price translates 
to about a 1.25-pct change in ROR. 
Again, this fact is a direct reflection 
of the relative importance of nickel rev- 
enue. It is also estimated that manga- 
nese, cobalt, and copper would add 1.1, 
0.41, and 0.33 pet, respectively, per 1 
pet rise in commodity price. 



13 



TABLE 9. - Price options and resultant 
rates of return 



Price per pound: 1 

Cobalt 

Copper 

Manganese 2 

Nickel 

ROR, pet: 

Cobalt 

Copper 

Manganese 

Nickel 



Low 



$6.75 

$0.77 

$0,186 

$3.18 

6.69 
6.50 
4.12 
6.11 



Base 



$8.53 

$1.17 

$0,250 

$3.62 

7.38 
7.38 
6.64 
7.38 



High 



13.00 
$1.57 
0.358 
$4.13 

8.98 
8.20 
9.80 
8.71 



ROR Rate of return. 
"■Escalated to 1983 dollars. 
2 Price per pound f erromanganese. 

Capital and operating costs were analy- 
zed next. Because of a relatively high 
uncertainty attached to estimates, end 
points were established at ±25 pet. Table 
10 contains results of test runs includ- 
ing intermediate runs using ±10 pet. Al- 
though incremental effects were only 
slightly higher than factors previously 
discussed, the wide test ranges resulted 
in the greatest effects on ROR's of any 
of the four parameters tested. Signifi- 
cantly, variations in operating costs ex- 
erted much more influence on ROR than all 
other factors including capital costs. 
This is especially true of four-metal op- 
erations which included the only test run 
to exceed 10 pet return. However, the 
resultant ROR of about 11 pet is still 
far below reasonable expectations. 

TABLE 10. - Effects of capital and oper- 
ating cost variations on rates of 
return, percent 



Variation, 



Capital: 
Cuprion. 
4-metal , 

Operating: 
Cuprion, 
4-metal, 



+25 


+ 10 1 


Base 


-10 


-25 


pet 


pet 




pet 


pet 


6.08 


6.70 


7.38 


8.14 


9.21 


5.31 


5.99 


6.64 


7.36 


8.28 


4.96 


6.15 


7.38 


8.21 


9.39 


2.18 


5.49 


6.64 


9.02 


11.17 



It was considered possible that lengthy 
lead time results in such significant 
future cash flow discounting that varia- 
tions of previous parameters achieves at 
best only modest increases in the ROR. 



To examine this possibility the prepro- 
duction period was shortened from 9 to 5 
yr, maintaining investment category to- 
tals constant, but accelerating expendi- 
ture rate. In table 11, returns of the 
resultant compressed schedule are compar- 
ed with base returns. Considering the 
original premise and the degree that the 
preproduction period is shortened, it is 
surprising that so little effect is 
noted. 

TABLE 11. - Effects of shortened develop- 
ment schedule on rates of return, 
percent 



Cuprion. 
4-metal. 



Base 



7.38 
6.64 



Shortened 



8.10 
7.25 



Two additional best case runs were made 
in an attempt to evaluate the cumulative 
effect of varying all test parameters 
simultaneously. Worst case scenarios 
were not run because they would produce 
extremely low or negative returns. In 
addition to using high values for re- 
coveries, prices, and grades, the best 
case included 25 pet decreases in capital 
and operating costs, and a shortened de- 
velopment schedule discussed in the pre- 
ceding paragraph. As shown in the fol- 
lowing tabulation, there is a marked im- 
provement in ROR's. 

• Three-metal (Cuprion) 19.3 pet ROR 

• Four-metal 23.7 pet ROR 

Particularly interesting is the potential 
of four-metal operations to be slightly 
more profitable than three-metal. How- 
ever, these predicted returns would still 
be of marginal interest to potential 
ocean miners. 

Table 12 summarizes data pertaining to 
increased ROR's resulting from the most 
favorable options. Actual predicted re- 
turns are on the summary side of the ta- 
ble while figures on the right side 
(change) are percent increase, calculated 
by dividing the actual amount of increase 
by the base case ROR (either 7.38 or 
6.64) and multiplying by 100. Unfavor- 
able options are not summarized, because 
of extremely low returns which preclude 



14 



TABLE 12. - Rates of return effected by favorable options, percent 





Summary ' 


Change (increase) 2 




Metal 
recovery 


Deposit 
grade 


Commodity 
price 


Metal 
recovery 


Deposit 
grade 


Commodity 
price 


Cobalt 


7.63 
7.43 
7.59 
9.08 


7.75 

7.61 

8.31 

NAp 


8.98 
8.20 
8.71 
9.80 


3.4 

0.6 

2.8 

36.7 


5.0 

3.1 

12.6 

NAp 


21.7 




11.1 


Nickel 


18.0 


Ferromanganese. . . 


47.6 




Capital 
costs 


Operating 
costs 


Shortened 
development 


Capital 
costs 


Operating 
costs 


Shortened 
development 




9.21 
8.28 


9.39 
11.17 


8.10 
7.25 


24.8 
24.7 


27.2 
68.2 


9.8 




9.2 



NAp Not applicable. 

1 Compare with base case — 3-metal, 7.38 pet; 4-metal, 6.64 pet. 

2 Relative change, calculated by dividing the amount of increase by the base rate of 
return (ROR) and multiplying by 100. 



any thought of mining. Differences in 
ROR's resulting from independent changes 
in metal recovery, grade, and price vari- 
ations are a function of parameter range 
and revenue generated by the affected 
commodity. As an example, nickel con- 
tributes much more revenue to proposed 
operations, yet greater variance both in 
recovery and commodity price of cobalt 
accounts for larger potential increases 
in ROR. On the other hand, estimated 
grade variability for the two commodities 
is the same (10 pet), and the predicted 
ROR increase for nickel is two and one- 
half times that of cobalt. 



Rates of return associated with rela- 
tively large variations of capital and 
especially operating costs are also most 
significant. Predicted ROR increases 
range from about 25 pet, for 25 pet less 
capital investment, to nearly 70 pet for 
a 25-pct reduction in four-metal operat- 
ing expense. Shortened development peri- 
od (9 to 5 yr) has little effect on ROR; 
but in the analysis costs were not reduc- 
ed, only the rate spending was increased. 
A larger and possibly significant in- 
crease might result if the shortened de- 
velopment period was accompanied by less 
capital spending. 



Potential impacts related to copper are 
comparatively low, because of relatively 
low commodity value and low degree of 
variance. Conversely, changes in ferro- 
manganese parameters substantially influ- 
ence ROR's, both by contributing a large 
percentage of revenue and by having fair- 
ly high degrees of uncertainty associated 
with metal recovery and selling price. 



The best case scenarios yielded very 
large percentage increases in ROR's; ap- 
proximately 160 and 260 pet for three- 
and four-metal operations, respectively. 
While predicted returns are respectable, 
they are dependent on a series of fortu- 
nate circumstances, not likely to occur 
simultaneously. 



SUMMARY AND CONCLUSIONS 



The following statements summarize re- 
sults of the sensitivity analyses de- 
scribed in preceding sections: 

1. Incremental changes in metal recov- 
eries, deposit grade, and commodity price 
affects ROR's, similarly. Accordingly, a 
1-pct variance in grade has nearly the 



same effect on return as would a 1-pct 
change in price or recovery 

2. Among deposit grade, metal recov- 
ery, and commodity price, the potential 
for changing ROR in relation to the base 
case is greatest for commodity price. 
This is because price estimates are less 



15 



reliable and consequently, 
were greater. 



test ranges 



3. Comparisons of three- and four- 
metal operations indicate that under cer- 
tain circumstances (i.e., high manganese 
recovery and commodity price) four-metal 
operations could be slightly more profit- 
able. This is borne out in the best case 
scenarios . 

4. Based on proposed integrated opera- 
tions, changes in capital costs affect 
both three and four-metal operations 
about equally. For a 1-pct change in in- 
vestment, there is about a 1-pct change 
in ROR. 

5. Variation of operating costs af- 
fects four-metal operations dramatically, 



resulting in an estimated 2.7-pct change 
in ROR for every percentage change in op- 
erating expenses. Changes in three-metal 
ROR are about 1.1 to 1. 

6. The sensitivity analysis shows that 
reasonable variations from the base case 
still result in ROR's well below the 25- 
to 30-pct thought to be required. Only 
the best case predictions approach that 
level. 

Based on the foregoing analysis it is 
most likely that nodules will not be 
mined and processed in the foreseeable 
future without significant financial in- 
centives. The incentives could be in the 
form of price supports, tax breaks, or 
other programs such as financing research 
and development. 



REFERENCES 



1. Hillman, C. T. Manganese Nodule 
Resources of Three Areas in the Northeast 
Pacific Ocean: With Proposed Mining- 
Benef iciation Systems and Costs. BuMines 
IC 8933, 1983, 60 pp. 

2. Davidoff, R. L. Supply Analyses 
Model (SAM): A Minerals Availability 
System Methodology. BuMines IC 8820, 
1980, p. 14. 

3. Ozturgut, E., G. C. Anderson, R. E. 
Burns, J. W. Lavaelle, and S. A. Swift. 
Deep Ocean Mining of Manganese in the 
North Pacific, Premining Environmental 
Conditions and Anticipated Mining Ef- 
fects. Dep. Commerce-NOAA Tech. Memoran- 
dum ERL MESA-33, 1978, 133 pp.; available 
upon request from C. T. Hillman, BuMines, 
Spokane, WA. 

4. Menard, H. W. Marine Geology of 
the Pacific. McGraw-Hill, 1964, 271 pp. 

5. Piper, D. Z. (comp.). Deep Ocean 
Environmental Study: Geology and Geo- 
chemistry of DOMES Sites A, B, and C, 
Equatorial North Pacific. U.S. Geol. 



Surv. OFR 77-778, 1977, pp. 217-266; 
available for consulation at U.S. Geol. 
Surv. libraries in Menlo Park, CA, Golden 
Co, and Reston, VA. 

6. Ryan, W. B. T., and B. C. Heezen. 
Smothering of Deep Sea Benthic Communi- 
ties From Natural Disasters. 1976, 132 
pp.; NTIS PB 279527/AS. 

7. Sorem, R. K. , and R. H. Fewkes. 
Manganese Nodule Research Data, and Meth- 
ods of Investigation. IFI/Plenum, 1979, 
723 pp. 

8. Monhemius , A. J. The Extractive 
Metallurgy of Deep Sea Manganese Nodules. 
Ch. in Topics in Nonferrous Extractive 
Metallurgy. Soc. Chem. Ind. , 1980, pp. 
42-69. 

9. Frazer, J. Z., and M. B. Fisk. 
Geological Factors Related to Character- 
istics of Seafloor Manganese Nodule De- 
posits (grant GO264024, Scripps Inst. 
Oceanography). BuMines OFR 142-80, 1980, 
41 pp.; NTIS PB 81-145831. 



16 



10. Fewkes, R. H. , W. D. McFarland, W. 
R. Reinhart, and R. K. Sorem. Develop- 
ment of a Reliable Method for Evaluation 
of Deep Sea Manganese Nodule Deposits 
(grant GO 274013, WA State Univ.). Bu- 
Mines OFR 64-80, 1979, 94 pp.; NTIS PB 
80-182116. 

11. Frazer, J. Z., M. B. Fisk, J. 
Elliott, M. White, and L. Wilson. Avail- 
ability of Copper, Nickel, Cobalt, and 
Manganese From Ocean Ferromanganese Nod- 
ules (grant G0264024, Scripps Inst. 
Oceanography). BuMines OFR 121-79, 1978, 
141 pp.; NTIS PB 300 356. 

12. Felix, D. Some Problems in Making 
Nodule Abundance Estimates From Seafloor 
Photographs. Marine Min. , v. 2, 1980, 
pp. 293-302. 

13. Frazer, J. Z. Manganese Nodule 
Reserves: An Updated Estimate. Marine 
Min., v. 1, 1977, pp. 103-123. 



14. Moncrieff, A. G. , and K. B. Smale- 
Adams. The Economics of First Generation 
Manganese Nodule Operations. Min. Congr. 
J., v. 60, No. 12, 1974, pp. 46-50. 

15. Flipse, J. E. Deep Ocean Mining 
Pollution Mitigation. Paper in Proceed- 
ings, 12th Annual Offshore Technology 
Conference (Houston, TX, May 5-8, 1980). 
Offshore Technol. Conf., Dallas, TX, pp. 
353-356. 

16. Gale, G. D. , (U.S. Bureau of 
Mines). Private communication, 1981; 
available upon request from C. T. Hill- 
man, BuMines, Spokane, WA. 

17. Flipse, J. E. An Economic Analy- 
sis of a Pioneer Deep Ocean Mining Ven- 
ture (partially supported by Sea Grant 
NA81AA-D00092, Texas A & M Univ.). TAMU- 
SG-82-201; COE Rep. 262, 1982, 131 pp. 



17 



APPENDIX. —CAPITAL AND OPERATING COST DETAIL FOR STUDY AREA CI 
TABLE A-l. - Mine costs, 1 million January 1983 dollars 



Costs 



Description 



CAPITAL 



Fixed capital: 

Exploration 

Research and development.... 
2 mine ships 

2 nodule collectors 

3 pipelines 

2 pumping systems 

2 sets of on-board equipment, 

Total 

Startup costs 

Working capital 

Total investment 



$21.0 
75.3 

199.5 

7.5 

51.7 

29.7 

87.1 



471.8 
23.2 
95.6 



590.6 



Initial 6-yr program. 

7-yr program. 

Capacity: 1.5 million t/yr each. 

Approximate width, 10 m. 

40-cm ID, including 1 spare. 

Pumps, connectors, valves. 

Nodule handling, storage. 

Equipment testing, redesign. 

Basis: 1.25 yr, 3.75 million dry t. 



OPERATING' 



Direct operating: 


$21.3 
2.0 
27.5 
6.0 
9.2 
0.1 
6.4 


4 crews, 2 per ship. 
Food and miscellaneous supplies. 
Ship and equipment. 
Ship, equipment, and personnel. 
Approximately 51,000 t diesel. 
Ship and equipment. 
Mine characteristics and equipment 
improvement. 








Fuel 




Exploration and continuing 
research and development. 


Total 


72.5 
4.0 






5.5 pet of direct costs. 






76.5 





'Estimates for 2 complete mining sys 
2 Total mining cost per dry metric to 



terns. 

n of ore: 



$25.50. 



18 



TABLE A-2. - Transportation costs, million January 1983 dollars 



Costs 



Description 



CAPITAL 



Fixed capital: 

3 transports , 

Slurry terminal , 

Slurry pipeline , 

Supply boat , 

Total 

Working capital , 

Total investment, 




Capacity: 44,800 dry t ore each, 
Dock and all facilities, 10 ha. 
40 km, includes land purchase. 
High-speed shuttle. 

Basis: 1.0 yr, 3.0 million dry t, 



OPERATING ' 



Direct operating: 
Transport: 

Wages and benefits , 

Subsistence and supplies, 
Maintenance and repair. . , 

Insurance , 

Fuel, lubrication, oil.., 

Port charges , 

Helicopter , 

Total , 

Supply boat , 

Total vessel costs..., 
Transport unload and store, 
Slurry pipeline to plant.., 

Total , 

General and administrative.., 
Annual operating cost, 



$4.7 
.5 
6.2 
1.4 
8.9 
1.0 
.7 



23.4 
1.8 



25.2 
3.1 
6.5 



34.8 
1.9 



36.7 



U.S. crews, 3 transports. 

Food and miscellaneous supplies. 

Ships and equipment. 

Ships, equipment, and personnel. 

Approximately 49,400 t diesel. 

Docking, tieup, and miscellaneous, 

Crew, fuel, maintenance, repair. 

Do. 

Operation, maintenance, repair. 
Do. 

5.5 pet of direct costs. 



'Total cost per day metric ton of ore: $12.23. 



19 



TABLE A-3 - Process costs, million January 1983 dollars 



Costs 



Description 





cap: 


[TAL 


CUPRION PLANT 
Fixed capital: 


$82.5 
2.6 

370.3 

159.1 

30.3 

20.9 

5.7 


7 yr, including pilot plant. 

About 90 ha, including ferromanganese 

site. 
Installed cost plus auxiliaries. 
Installed cost. 
Land, piping, ponds. 
100 km, includes land purchase. 

8 km each, includes land. 








Total 


671.4 
55.5 






Basis: 0.5 yr, 1.5 million dry t. 




726.9 




FERROMANGANESE PLANT 
Fixed capital: 


129.6 
31.1 


Installed cost plus auxiliaries. 
Installed cost. 




Total 


160.7 
54.6 






Basis: 0.5 yr, 0.7 million dry t. 




215.3 






942.2 









OPERATING 



CUPRION PLANT 
Direct operating: 


$18.6 

4.0 
40.5 
31.8 

7.8 
2.7 
0.2 


Operators, maintenance, technical, 

professional, management. 
Operating chemicals and reagents. 
Coal, power, petroleum, water. 
Fixed expenses: maintenance, materials, 

insurance. 
Operating new and existing ponds. 
Operating, repair, and maintenance. 
Do. 






Pipeline to waste disposal... 
Railroad spur and access road 


Total 


105.6 
5.3 






5.0 pet of direct operating. 




110.9 




FERROMANGANESE PLANT 2 
Direct operating: 


32.0 

43.6 

118.6 

12.1 


Operators, maintenance, technical, 

professional, management. 
Operating chemicals and reagents. 
Coal, power, petroleum, water. 
Fixed expenses: maintenance, materials, 






Total 


206.3 
10.3 


insurance. 




5.0 pet of direct operating. 




216.6 






327.5 





'Total cost per dry metric ton of ore: $109.17 — $36.97 (Cuprion) and $72.20 
(ferromanganese) . 

2 Includes flotation, calcining, 
ferromanganese to east-coast marke 

*U.S. CPO. 198S-50S-019a0.024 



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